May 10, 2013

Kolkata: The Mamata Banerjee
government is facing an escalating crisis, with fresh proof emerging every day
of Trinamool's links to the fraudulent chit fund company, run by the Saradha
Group.

Ms Banerjee's party denies it, but
it's not likely to convince those like Julie Patua, an agent of Saradha, or her
clients.

Ms Patua is one of lakhs of Saradha
agents who sold bogus schemes that promised huge returns on small investments.

To avoid regulators, these schemes
were shown as sale of plots of land or travel packages.

As proof of its intentions, Saradha
would give every agent a hefty catalogue, full of pictures of non-existent
companies and mega projects. The clincher - pictures of their top management
led by Kunal Ghosh, Trinamool Congress MP, a key Mamata aide and CEO of Saradha's
media empire.

On Saradha-run television channels,
the group's investors say, they have seen Ms Banerjee giving away ambulances
donated by Saradha, to be used in the troubled Naxal-prone Junglemahal region.

Or of Ms Banerjee at the inauguration
of the takeover of Urdu newspaper Kalam, by Saradha.

Hardly surprising then that when
Saradha went bust, thousands of agents and depositors banged at the doors of
the Trinamool and Ms Banerjee.

The greatest anger is against Mr Ghosh
and Srinjoy Bose, another Trinamool MP and owner of the newspaper Pratidin, who
partnered with Saradha chief Sudipta Sen in September 2010, to set up a string
of newspapers, magazines and TV channels.

Both Mr Ghosh and Mr Bose claim they
had no idea that they were tying up with a questionable chit fund company.

An improbable claim given that Mr
Ghosh, who was editor ofPratidin, had co-authored a string of articles against
Saradha and other fake chit funds on the front pages of Pratidin - just three
months before the deal with Mr Sen was struck.

In a letter that he wrote to the
Central Bureau of Investigation (CBI) while he was underground last month after
his group collapsed, Sudipta Sen has claimed that those articles were used to
blackmail Saradha into funding a pro-Trinamool media empire, a charge denied by
Mr Ghosh.

In May 2012, Mr Bose exited the tie-up
with Saradha, since, he says, by then Saradha's cheques had started to bounce.

But Kunal Ghosh stayed on, rising
through Saradha's ranks to become first Group CEO, and then Executive President
of Saradha Media as recently as in January 2013.

Despite this, he claims ignorance of
the group's fraudulent businesses. His ex-employees are not convinced and have
filed an FIR against Mr Ghosh.

But the Trinamool-Saradha links seem
to have gone much beyond just using the company to fund a friendly media
empire. As is now emerging, the lines between the party and the company had
blurred, making it hard to tell who was feeding off the other.

The most powerful example is Madan
Mitra, Transport and Sports Minister, who was seen at a Saradha agents' meet in
Kolkata's Science City, heaping lavish praise on Sudipta Sen.

Mr Mitra claims he had appeared as a
courtesy. But Saradha agents like Reba Mitra say that Madan Mitra was president
of their employees' union.

For her 2009 Lok Sabha election
campaign, Shatabdi Roy, the actress and Trinamool MP from Birbhum, used Somnath
Dutta, Vice President of the Saradha Group as her campaign manager.

In another video, she is seen thanking
Sudipta Sen for making her brand ambassador of the Saradha group.

Given the public anger, some in the
Trinamool claim they spoke up earlier.

Like Somen Mitra, MP from Diamond
Harbour, who says he wrote to the Prime Minister in May 2011 about the menace
of dodgy investment companies. Except that Mr Mitra was himself seen at a
Saradha agents' meet. He claims he was invited since Saradha was very active in
his constituency.

In just a matter of three years, the
Saradha-Trinamool links extended all the way to the ground, with Trinamool
cadre doubling up as agents and vice versa.

This allowed the Saradha group to
rapidly expand its base in the rural hinterland, collecting crores of rupees
from the marginal and the poor, with no concrete proof that it was being
ploughed into profitable investments.

From time to time, agents and
investors were shown tracts of undeveloped land. Julie Patua says she was a
shown a plot of land and told the company had 4,000 acres in all.

Or there were outright bogus investments,
like a defunct two-wheeler factory on the outskirts of Kolkata, brought to life
only to impress visitors.

Under fire for its inaction, the
Trinamool claims it needs special laws to act against fake chit funds, now
finally passed in haste this week by the Assembly.

Some say this is just an excuse; that
existing laws have enough powers to act against fraudulent companies. In
neighbouring Assam, which doesn't have special laws, the police have registered
246 FIRs against such companies. They have already frozen 106 bank accounts of
Saradha, land assets and recovered Rs. 25 crore in deposits and Rs. 90 lakh in
cash.

But it is not clear if the Trinamool
is learning from its lessons. Sitting in the office of the Saradha's Urdu
publications, is builder-developer Asif Khan.

He is vague about his antecedents,
saying he is a businessman and the Trinamool's point person in Uttar Pradesh.
Mr Khan, who may well be the Trinamool's next Sudipta Sen, says he has been
brought in by party leader Mukul Roy to "help" ailing Saradha
publications.

But the CPM says he is proof that the
ruling Trimaool continues to seek funds from shady sources to maintain control
over the media.

KOLKATA: Left unions have dominated
the elections held in Eastern, South Eastern and Metro Railways to decide the
employees' bodies that would be permitted to interact with the management.
According to law, to qualify as a recognised body, a union would either have to
bag at least 35% of the total votes polled or 30% of the total votes.

In South Eastern Railway, the
Congress-backed South Eastern Railway Men's Congress (SERMC) won 29,932 votes
and was declared the winner. The Left-backed South Eastern Railway Men's Union
came a close second with 27,536 votes while the Trinamool-backed South Eastern
Railway Men's Trinamool Congress (SERMTMC) got only 3,443 votes. In the Metro
Railway, the Left-backed Metro Railway Men's Union won and was declared the
recognised union.

The
chit fund scam in West Bengal has left lakhs of people lamenting the loss of
their life savings.

Majority
of them are poor and daily wage labourers who do not even have bank accounts.
They were lured into contributing their daily, weekly or monthly earnings to
the chit funds, which generally paint a rosy picture about the amount getting
doubled within a few months.

These
are ponzi schemes. Such schemes are not regulated, but are allowed to advertise
that all the benefits would go to the depositor in the form of real estate or
multiplication of their amount. In the absence of regular employment growth,
many young people become agents of such chit funds. Thus, it becomes a huge
mechanism for defrauding people and plundering their small earnings. In West
Bengal, there has been no economic development for over a decade. These chit
funds generally get their nod from the Centre, such as the RBI, finance
ministry and so on.

During
the Left Front’s rule, one such chit fund was exposed and after that the
government adopted a law to punish the evildoers and return the money of the
depositors. But for some reason, this law did not get the approval of the
President. Certain amendments were made and the new bill was adopted in 2009.
This, too, awaits the signature of the President.

However,
after a series of complaints against chit funds, Securities and Exchange Board
of India (Sebi) launched an investigation and wrote to the West Bengal
government the fraud that was going on. But the Trinamul Congress government,
which had replaced the Left Front government, refused to act on Sebi’s
warning.

Chief
Minister Mamata Banerjee claims that she was not aware and came to know only
recently about the fraudulent activities of these chit funds, in particular,
the biggest of them, known as the Saradha Group. The Saradha Group has
collected several thousands of crores of the poor people’s earnings, and with
that it also acquired several media companies and TV channels. The Saradha
Group and the Trinamul Congress were actively working in tandem.

Today,
the bubble has burst. Several lakhs of poor people have been looted of their
entire earnings without any hope of recovering the money. Three people have
committed suicide and others are in despair. The main offenders, the bosses of
the Saradha Group, were on the run perhaps with the knowledge of several higher
ups in the Trinamul government. They were ultimately apprehended from a hotel
in Jammu and Kashmir. The CID and the Kolkata Police are investigating the
roots and branches of this fraud, the like of which West Bengal has never seen
before.

The
Trinamul government has much to answer for this. The names of two Trinamul MPs
that have been in news in connection with the fraud is only the tip of the
iceberg. How is such financial fraud possible without the active connivance of
the government? Ms Banerjee herself was present at the promotional event of the
Saradha Group. The CBI should be asked to conduct for a complete inquiry into
this.

(As told to Thufail PTI)

The
Left, SEBI are to blame

Sultan Ahmed, former Union minister and an MP (Trinamul
Congress)

It’s
too simplistic and politically motivated to blame the Trinamul Congress-led
West Bengal government for a chit fund company run by the Saradha Group going
bust and, consequently, duping a large number of small investors of their
hard-earned money. First and foremost, this money business being run in the
name of chit fund is not new for the country or West Bengal.

These
have been mushrooming for the past several years and people had been victims of
this earlier too. In 1980, during the rule of the Left Front government in the
state, small investors in West Bengal were duped of their hard-earned money by
chit fund companies like Sanchayita Invest-ment, Overland Invest-ment etc. In
these cases, middle class and educated people living in the urban areas were
deceived.

During
the Left Front regime, the chit fund companies spread their wings into the
rural areas of West Bengal, with each village having a couple of their offices.
They have been operating for the last 20 years. The Saradha Group may have gone
bust, but there are 70 to 80 such companies still operating in the state.

How
can the state government be held res-ponsible for the Saradha Group duping the
people? In our country, we have a number of regulators for the financial
market, including the Reserve Bank of India (RBI), income tax department of the
ministry of finance, Securities and Exchange Board of India (Sebi), Registrar
of Companies (RoC), etc. Why were all these financial regulators sleeping for
the past 20 years when such chit fund companies mushroomed and spread their
wings in rural areas?

It’s
not a case of West Bengal alone. Assam chief minister Tarun Gogoi has also
complained against the operations of such companies in his state. Therefore,
blaming the West Bengal government for the chit fund scam will serve no
purpose.

Importantly,
the state government had, in 2003, got a legislative proposal to regulate and
check chit fund companies passed in the West Bengal Assem-bly, but is still
awaiting the nod of the President. The state government has constituted a probe
to inquire into the Saradha Group scam and Chief Minister Mamata Banerjee has
set up a corpus fund of Rs 500 crore. She has said that the poor people who
have lost their money will get their savings back. But no one is questioning
the dereliction of duties by the financial regulators, including the RBI, Sebi,
RoC etc. Why?

So
far as two MPs of our party are concerned, they are cooperating in the probe.
While one was connected with a news daily, another was the chief executive
officer of the printing and publishing firm owned by the Saradha Group. If they
are found guilty, the party will definitely take action against them.

The
Opposition Left Front is clearly trying to take political advantage of the
issue. However, people will realise in the end that it was dereliction of duty
on the parts of the earlier Left Front government that such chit fund companies
mushroomed. People will not fall prey into the Left Front trap again. It’s
commendable that Ms Banerjee has taken swift action to address the woes of the
people.

New Delhi : The World Bank slashed
India’s economic growth outlook for 2013-14 to 6.1% from 7%, on the back of an
expected fall in agricultural and services growth, but said that an increasingly
favourable global environment and rising domestic demand may drive the
country’s GDP growth to 8% in the long term.

World Bank’s latest India development
update, released on Tuesday, sees the agricultural sector growing at 2% and
services growth at 7.4% for the current financial year, down from the 2.7% and
8.5% respectively that it saw earlier.

The World Bank’s growth projection,
which is 13% down over its earlier expectation, comes at the lower end of
finance minister P Chidambaram’s growth target for 6.1 to 6.7 % for the same
year. The PMEAC sees 2013-14 GDP growth at 6.4%.

“The World Bank’s expectations are on
the higher side. Services sector growth is expected to remain low due to a
relative slowdown in areas like financial services or transportation,” Sujan
Hajra, chief economist of Anand Rathi Securities, told FE. Hajra sees FY14 GDP
at 5.7-5.8% much lower than projections of the government as well as the World
Bank.

He echoed the bank’s medium to
long-term expectations and said that the basic India story remained unscathed,
with the current weakness a result of a cyclical slowdown.

“Recent data point to some improvement
in economic activity. Together with a modest improvement in investment and some
strengthening in the global economic activity, signs point to a gradual
recovery in growth ahead,” the report stated. It pegs FY14-15 GDP growth at
6.7% and the last financial year’s expected growth at 5%, in line with that of
the government’s central statistical office.

The bank stated that while a rise in
domestic demand, easing inflationary pressure and lower fiscal deficit will
give more room for the government to pass through reforms, job creation,
infrastructure bottlenecks and the expected pressure on expenditure due to a
possible roll out of the food security Bill could create headwinds.

“Infrastructure remains a challenge.
While the government has recognised this, there is no single way to address it.
There are good examples of world class infrastructure in parts of the country.
It is about how you take the best practices out of these and replicate them in
other parts of India,” Denis Medvedev, senior country economist of the World
Bank, said.

In a separate report on South Asian
economies, the bank stated that other countries will see a spillover effect and
benefit in the medium-to-long-term from India’s influence following the
regional giant’s slew of reform measures and increasing foreign investment.

Kolkata: The Saradha Group
that collapsed last month controlled many television channels and newspapers in
West Bengal. So do some other companies that have been accused of running
Saradha-like get-rich-quick schemes.

Over the last two years, Mamata Banerjee's
political opponents have alleged that the ruling Trinamool Congress that she
heads has tried to control the media in the state, particularly through the
publications and channels owned by such companies.

Senior journalist Manas Ghosh of The
Statesman says that the editorial stance of these media groups is very
pro-Mamata Banerjee. "When Mamata came to power, I told her, 'What is
this?' She said to me 'these people are all cheats'. Yet, a few days later, I
started seeing government advertisements with prominent photos of Mamata in
these papers and TV channels," he said.

At inquiry into Saradha's chit-fund scam,
stories of loss and despair In March last year, Mamata Banerjee controversially
banned several leading newspapers from public libraries in the state and listed
eight newspapers they could subscribe to. Two of them were Saradha group
publications and one published by the Rose Valley Group, which is being
investigated by market regulator Securities and Exchange Board of India.

Also last year, Ms Banerjee picked four
journalists to be Rajya Sabha MPs from her party, provoking more allegations
that she was trying to control the media in the state.

One of these MPs was Kunal Ghosh, who headed
the Saradha Group's media wing and who is now in trouble because of that association.
Two FIRs have been filed against him by Saradha's media employees, who allege
he knew of the group's precarious finances, but did not warn them.

Mr Ghosh has promised to quit his Rajya Sabha
seat "if any probe reveals that I have taken advantage of the chit fund
business".

The Saradha Group had four TV channels and
about 10 newspapers, all of which have shut down. The Rose Valley Group owns
nine satellite television channels, including news channels and also a
newspaper.

Other groups against whom the Ministry of
Corporate Affairs has received complaints - like the Chakra Group, the Tower
Group, and the Rahul Group - also own media publications or channels.

Kolkata: The West Bengal chit fund is
getting bigger each day. It has now turns out that ponzi schemes in the state
financed not just media houses but Tollywood films as well. In the past four
years, at least one in three films has been produced by groups that run ponzi
schemes.

Rose Valley, a deposit-taking company
which is now under the MCA scanner, has produced 18 films including three
National Award-winning ones. The Prayag group of companies, also under probe,
is building a film city with none other than Shah Rukh Khan as its brand
ambassador. But the industry is worried at what it sees as a mere
brand-building exercise by the chit funds.

Arijit Dutta, former President of
Eastern India Motion Pictures Association, said, "There are about 18 chit
fund companies which have shown interest in producing films or have produced
films." Filmmaker Sumon Mukherjee said, "They have no background in
cinema, no understanding, no concern about the future of cinema. They just have
some loose money, illegal money coming in and they want to use it."

Rahul Mukherjee, a first time director
is now scrambling for producers to finance his film. His producer, a chit fund
company, deserted the project and went hiding after the crackdown on the
Saradha group. "80 per cent of the film is done, but now we cannot
complete it without funds. So it has stopped," Rahul said.

Projects have been shelved and
releases have been postponed. With no state funding and an unregulated market
with a lot of grey areas, the film industry is caught between a rock and a hard
place. Filmmaker Q said, "It's all right for us to say we need a clean
source of funding but how? At the end of the day a director wants to make a
film."

The Bengali film industry, which has
seen an unprecedented increase in terms of sheer volume of films produced and
released because of the fresh flow of funds, has suffered a setback. But many
of the industry insiders believe that this setback was perhaps necessary to
purge the industry of illegal money.

JSW Steel has put on hold plans to set up a
10 million tonnes steel plant in West Bengal as it has not been able to secure
long-term iron ore supplies for the Rs. 35,000 crore project.

"It is stalled right now, it's on hold.
Unless we are going to fix the iron ore matter, unless we have the visibility
of iron ore, we cannot move ahead. It's on hold," JSW chairman and
managing director Sajjan Jindal told PTI.

JSW is working with the Centre and state
government to secure iron ore mining lease, he said, adding, long-term
visibility of iron ore is required to begin construction of the plant.

When asked about any timeline for the
project, he said: "Nothing (is) in my control. The project is stalled at
the moment."

The West Bengal project of JSW, first
announced in 2007, has been getting delayed for various reasons. This included
a land acquisition row with the state government after Mamata Banerjee-led
government took charge in 2011. The issue has now been resolved and land
acquisition has been completed. However, the company has not been willing to move
further on any new project, including the ones in West Bengal, without securing
either long term iron ore supply agreement or a captive iron ore mine due to
its experience in Karnataka.

In Karnataka, the company runs a 10 million
tonnes (MT) steel plant but it neither has any captive mine nor any long term
iron ore supply agreement and the company has to source the ore from open
market.

For more than one and half years now, JSW has
been running the Karnataka plant at a reduced capacity due to iron ore crunch
in the state.

Currently, all ore in the state gets
auctioned due to a Supreme Court direction, thereby increasing the raw material
cost for the company.

According to original plan, JSW's West Bengal
project was envisaged to have a 10 million tonnes steel plant along with a
1,600 MW captive power plant at a total cost of Rs. 35,000 crore that requires
about 4,300 acres of land.

In the first phase, the company had plans to
set up a 3 MT steel plant and a 300 MW captive power plant with an investment
of Rs. 20,000 crore. The first phase was proposed to be financed at a
debt-equity ratio of 65:35.

Deallocation of Gourangdih ABC coal block
last year by the Coal Ministry is also an issue JSW is facing. The block,
allocated to JSW and Himachal EMTA jointly in July, 2009 would have provided
coal for the captive power plant of the Bengal plant.

JSW has challenged the deallocation of the
coal block in court and the matter is currently sub-judice.